OPEC and allies to boosts oil production as energy prices soar

London: The OPEC oil cartel and allied producing countries including Russia will raise production by 648,000 barrels per day in July and August, offering modest relief for a global economy suffering from soaring energy prices and the resulting inflation.

The decision Thursday steps up the pace by the alliance, known as OPEC+, in restoring cuts made during the worst of the pandemic recession. The group had been adding a steady 432,000 barrels per day each month to gradually restore production cuts from 2020.

The move to increase production faster than planned comes as rising crude prices have pushed gasoline to a record high in the U.S. There are fears that elevated energy prices could slow the global economy as it emerges from the pandemic.

The increase did not appear to ease concerns about tight supply and oil prices actually rose after the decision was announced Thursday.

U.S. crude, which had fallen by as much as 3 per barrel early in the day, reversing course and traded up 0.9 per cent at 116.23. International benchmark Brent rose 0.7 per cent at 117.02. Market traders may have expected more from the meeting, such as an indication from de facto OPEC leader Saudi Arabia that it could make up for any shortfall due to sanctions against Russia.

Instead the alliance's statement merely mentioned reopening from COVID-19 lockdowns in major global economic centers and the end of seasonal maintenance work at refineries as justifications for the incremental increase. Lockdowns in Shanghai and Beijing have sapped fuel demand

in China.

OPEC+ decisions have been complicated by the group's failure to meet its production targets due to underinvestment and other roadblocks in some member countries. Actual production has lagged the scheduled increases.